Compensation for Hospice CEO’s Soars and One Owner Games the Medicare System

Long-Term Care Facilities are becoming a more lucrative business in America as the country’s CEO’s compensation continue their upward trend. In 2016, the average salary for CEO’s jumped to $465,875 according to a report by The Hospital & Healthcare Compensation Service. Compared to an average salary of $441,604 in 2015, this represents a 5.4 percent increase in salaries.

This increase average CEO salary of “long-term care systems” is also in-line with large year-end bonuses. In 2015, the average bonus was a very comfortable $175,000. For 2016, this number was a relatively smaller (but substantial, nonetheless) amount of $92,730.

Pay grade, predictably, varied by the size of the hospice provider. For hospices with less than $100 million in annual revenue, the average CEO’s compensation was almost $370,000. For larger providers, with annual revenues over $1 billion, the average CEO compensation jumped to $823,000.

Chief Operating Officers are also doing quite well in the hospice industry. Average compensation for a COO position in the long-term care facility industry was $355,000 – with an average salary of $288,000 and an average bonus of $67,000.

Unfortunately, salaries are not the only means of increasing compensation in the long-term care industry. In a stunning case out of Illinois, a hospice owner was sentenced to six and half years in federal prison for Medicare fraud – where he illegally “upgraded” nursing home patients to hospice care and proceeded to pocket the extra payments from Medicare.

Seth Gilman, who owned Passages Hospice (the largest hospice in Illinois until his indictment in 2014), would apparently tell the family members of nursing home residents that their loved one was terminally ill. The family would then remove their loved one from the nursing home and place him or her in Passages Hospice. According to federal prosecutors, many of these patients would remain in hospice for years – exceeding the six-month cap for federal funding.

For each resident that was “upgraded” to hospice care– the average Medicare reimbursement jumped from $150 to $600 per day. Gilman, the owner, would keep $75 per day and pay the nursing providers an average of $250 to keep quiet. Gilman received almost $1.2 million in additional compensation through this fraudulent scheme, which federal prosecutors say he spent on purchasing airplanes, luxury sports cars and a “daily cocaine habit.”

For his part, Gilman states that, “I am ashamed of what I did and I am sorry for it and I have no excuse. I betrayed the trust of Medicare and I besmirched the integrity of hospice altogether. I was stupid and I was wrong.” Other Passage employees have also been charged in the case.